This case pertains to the dishonor of cheques and the challenge ...

Cheque dishonor case: Firm and directors not liable for cheques signed by individual in personal capacity.

Case Laws     Indian Laws

November 7, 2024

This case pertains to the dishonor of cheques and the challenge to cognizance and summoning orders. The key points are: The cheques were signed and issued by respondent No. 3, Bhagawat Daulat Gawali, in his individual capacity, unconnected to the petitioners or the alleged business transaction between petitioner No. 1 (Bipin Lal Singh Pagar through his proprietorship firm) and respondent No. 2 (Tiger Logistics (India) Limited). The cheques were dishonored due to "Account Closed." Since petitioner No. 1 did not sign the cheques, he cannot be held liable u/s 138 of the Negotiable Instruments Act, 1881. Respondent No. 2's claim that the cheques were issued by respondent No. 3 on behalf of the petitioners may be grounds for a civil suit but not a complaint u/s 138. The petitioners, not being signatories, cannot be summoned in the complaint case u/s 138. The summoning orders against the petitioners are set aside, though proceedings may continue against Bhagawat Daulat Gawali in accordance with the law.

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